China renews attack on ADB over disputed India loan

BEIJING (Reuters) - China fiercely criticised the Asian Development Bank on Thursday for financing a project in northeast India in territory that is claimed by Beijing.

The proposed $60 million watershed protection loan in the impoverished state of Arunachal Pradesh is part of the ADB's 2009-2012 lending programme for India worth a total $2.9 billion.

"China has expressed strong discontent. The action can neither change the fact that China and India have a huge territorial controversy, nor China's fundamental position on the border issues between China and India," Qin Gang, a spokesman for the Foreign Ministry, told a regular news conference.

The ministry went on the offensive two days after Chinese President Hu Jintao and Indian Prime Minister Manmohan Singh participated in a summit with the leaders of Russia and Brazil, where the four demanded more power for developing nations in international financial institutions.

"The ADB should not get involved in members' political issues. The action has marred the ADB's reputation and harmed its members' interests. The Chinese government demands that the ADB take effective measures to eliminate this bad influence," Qin said.

The Manila-based ADB had to postpone consideration of the Indian loan programme in March because of objections by China, which fought a brief border war with India in 1962.

They have yet to resolve the dispute in several remote areas of the Himalayas, where India and Pakistan also dispute their borders, even though China is now India's biggest trading partner.

The ADB's board reconsidered its India lending proposals on Monday and expressed "broad support for the general development thrust and direction" of the strategy, the Press Trust of India quoted ADB spokeswoman Ann Quorn as saying in an e-mail.

Quorn could not immediately be reached to clarify whether the ADB would now go ahead with its India programme, including the Arunachal Pradesh project.